Taiwan has ruled that Foxconn, one of its star technology companies, must seek government permission to invest in China semiconductor maker Tsinghua Unigroup.
Media reports in Taipei have said that Foxconn’s China-listed subsidiary is seeking the investment as part of its wider push from electronics into computer chips.
Foxconn Industrial Internet plans to spend 9.8 billion yuan ($1.46 billion) for a stake in Unigroup.
Taiwan’s government has become increasingly cautious about China amid rising concern in Taipei that Beijing is stepping up its economic espionage.
Taiwanese chipmakers are not permitted to site their most advanced tech in China.
Rio Lu, deputy executive secretary of Taiwan’s Economy Ministry’s Investment Commission, said on Wednesday they had been in contact with Foxconn and “reminded them that the case needs to be reviewed before doing anything”.
Foxconn Faces $840,000 Fine
If Foxconn breaks the rules it can be fined NT$25 million ($840,000), Lu said, adding her department has already reported this plan to Economy Minister Wang Mei-hua. Foxconn has a market cap of more than $40 billion.
Foxconn, formally called Hon Hai Precision Industry, which is a major assembler of iPhones for Apple, said on Wednesday that it will handle the case “in accordance with the rules”.
Foxconn has not formally confirmed any plan to invest in the Chinese group.
Originating as a branch of China’s Tsinghua University, Tsinghua Unigroup emerged in the previous decade as a would-be domestic champion for China’s laggard chip industry.
But the company fell into debt under former chairman Zhao Weiguo, prompting it to default on a number of bond payments in late 2020 end eventually face bankruptcy.
The conglomerate has yet to produce any global leaders in the semiconductor sector. A spokesperson for Unigroup did not respond to a request for comment.
Foxconn shares fell 0.4% on Thursday morning in Taipei.
- Reuters, with additional editing by George Russell